Investing

5 years from retirement - what to do with a bit of money?

  • Last Updated:
  • Aug 7th, 2021 11:35 pm
[OP]
Newbie
Apr 16, 2019
4 posts
2 upvotes
Sherwood Park, AB

5 years from retirement - what to do with a bit of money?

Hello all. I came into 50,000 (inheritance) and I'm not sure if I should plunk it into one of my current RRSP mutual funds (they are doing pretty good with returns of 8-12) or try something new like an ETF or indexed fund. Since I'm close to retirement, I'm wary of risk. We were late to the party (bad, bad investments and a company loss) and only have about 400,000 saved plus our 500,000 house (which we would sell if we needed to. We are building our nest egg by around 50,000 or more every year until we both retire in 5 years (hopefully). What do you think I should do with the newfound cash? Thanks, all!
11 replies
Deal Expert
User avatar
Dec 12, 2009
21321 posts
9745 upvotes
Toronto
OP, I don't know what your budget is like for retirement. Generally, most retirees thirst for steady income to replace the work paycheque. To that end, I think buying Canadian dividend income stocks is a good idea heading into retirement.
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Tangerine Bank, EQ Bank, Simplii
Sr. Member
Dec 8, 2020
604 posts
625 upvotes
Toronto
Trip13 wrote: Hello all. I came into 50,000 (inheritance) and I'm not sure if I should plunk it into one of my current RRSP mutual funds (they are doing pretty good with returns of 8-12) or try something new like an ETF or indexed fund.

Since I'm close to retirement, I'm wary of risk. We were late to the party (bad, bad investments and a company loss) and only have about 400,000 saved plus our 500,000 house (which we would sell if we needed to.

We are building our nest egg by around 50,000 or more every year until we both retire in 5 years (hopefully). What do you think I should do with the newfound cash? Thanks, all!
a) before retirement: $450,000 cash + RRSP + TFSA = ????

b) between now & retirement - what additional savings/money into TFSA/RRSP will you have ?

a+b+c) works pension + OAS + CPP

in retirement for the first 10 years what do you estimate your average mthly/yearly income will be - minus expenses = cash flow?

what have you already considered investing the $450,000 in?

have you considered going to a fee paid financial advisor?
.
Member
Jan 9, 2017
283 posts
376 upvotes
Agree with @will888 . End of year 2017, when I planned to retire in five years, I began to buy dividend stocks. I was ready to retire beginning of this year as my investment income can cover the expenses of my family. I am still working now but can quit any time.

But I guess for the OP, the first thing is you need to have a plan. Need to answer the question like what do you expect to spend each year? What kind of income do you expect in retirement? How much do you need to get from your investment, what kind of return do you expect from your investment? etc. etc. Retirement needs to be carefully planned. It might be worth it to go to a fee only financial advisor as @Janus2faced suggested.

You can also to here to educate yourself:

https://www.finiki.org/wiki/Main_Page

I learned a lot from this website.
Member
Jun 6, 2014
267 posts
104 upvotes
Toronto, ON
I think one of the pieces of advice skipped here is account maintenance. Do you want to keep track of a separate account, especially so close to retirement. And also, what is your plan for withdrawals. When you turn 72 your RRSP becomes an RRIF and the 5% withdrawals become mandatory. Which investment are you going to sell first?
Deal Expert
User avatar
Feb 8, 2014
22114 posts
8484 upvotes
Socially Distanced
You are late to the party but just got $50K. Think of it as a bit of catch up money :)

Decide if its more beneficial to use this money to max out TFSAs (if you have space) or get a tax deferral from RRSPs if they are not maxed out.

The advice for a fee only financial planner is sound.
In fact in Rand McNally they wear hats on their feet and hamburgers eat people
Jr. Member
Jul 22, 2018
143 posts
117 upvotes
you are basically asking if you want to try out indexed funds/ETFs.

ya sure go ahead, it is likely similar to your rrsp mutal funs with less MER.
Deal Expert
User avatar
Feb 8, 2014
22114 posts
8484 upvotes
Socially Distanced
I reread your initial post, if you play your cards right you are looking at close to a million dollars at retirement.
With some luck.

Plus the house.


Screenshot (3054).png
In fact in Rand McNally they wear hats on their feet and hamburgers eat people
[OP]
Newbie
Apr 16, 2019
4 posts
2 upvotes
Sherwood Park, AB
Wow - thank you all. Lots to think about. Especially the advice regarding finding a financial advisor...

Fee only? How do I find one who is worth the money? There are so many out there. Any advice? Is there an association that they should belong to? Minimum credentials? Thank you all again!
Sr. Member
Dec 8, 2020
604 posts
625 upvotes
Toronto
Trip13 wrote: Wow - thank you all. Lots to think about. Especially the advice regarding finding a financial advisor...

Fee only? How do I find one who is worth the money? There are so many out there. Any advice? Is there an association that they should belong to? Minimum credentials? Thank you all again!
google is your friend.

let me start it for you.

https://www.bestinedmonton.com/best-fin ... -edmonton/
.
Member
May 28, 2012
455 posts
414 upvotes
ONT
Trip13 wrote: Wow - thank you all. Lots to think about. Especially the advice regarding finding a financial advisor...

Fee only? How do I find one who is worth the money? There are so many out there. Any advice? Is there an association that they should belong to? Minimum credentials? Thank you all again!
A fellow Albertan can probably advise you at reasonable cost: https://boomerandecho.com/weekend-readi ... n-edition/

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